Determinants of Foreign Direct Investment in the Mining Industry

Abstract

A range of social, political, and economic factors determine where mining companies invest their scarce capital. This chapter identifies nine areas of risk that investors need to consider before investing in the sector. These include high sunk costs, the finite life of a deposit, and the long period to achieve a positive finan- cial return. Add to this, legacy issues and it is clear that mining is a high-risk ven- ture. This chapter argues that increased attention to the nine areas of risk may benefit mining companies in the future. Abbreviations